Correctlyanswerallquestions.
Draw a correctly labeled graph of long-run aggregate supply, short-run aggregate supply, and aggregate demand, AND show each of the following for an economy in a recessionary gap.
i. Current equilibrium output and price level, labeled as Y1 and PL1
ii. Full employment output, labeled as Yf.
Please match the following terms to the definition 1. It is characterized by the bell-shaped curve a. Unsystematic variation 2. The scores that occurs most frequently b. Variance 3. An estimate of average variability (spread) of a set of c. Stepwise Multiple Regression data d. Validity v 4. The average of the scores e. Range 5. Quantitative measure of the degree of symmetry of a f Independent variable distribution about the mean 6. An estimate of the average variability (spread) of a set of 8. Kurtosis data measured in the same units of measurement as the h. Mulitcollinearity original data i. Confounding variables v 7. The middle score when the scores are ranked in order ]. Median 8. Quantitative measure of the degree of peakedness of a k. Measurement Error distribution 1. Reliability 9. Looking at the dispersion of scores. Takes the highest score subtracts from the lowest score m. Hierarchical Multiple Regression v 10. Whether an instrument actually measures what it sets n. Multiple Regression out to measure o. Normal Distribution 11. Looks at the relationship between two variables while p. Standard Deviation controlling the effects of one or more additional variables q. Biserial Correlation 12. variation results from random factors that exist r. Partial Correlation between the experimental conditions (such as natural differences in ability, the time of day, etc..) s. Point Biserial Correction 13. Type of correlation where you have two categories but t. Continuous variables there is a range (ie failing or passing) I Categorical variablesQUESTION 1: Consider the graph below with the LRAS, SRAS and AD in period 1 and period 2. Answer the following. Price level LRAS, LRAS, SRAS, SRAS, B 104 100 AD, AD, $10 11 11.3 Real GDP a. What will be the level of real GDP and price level in period 2 if the government does not take action. b. What will be the inflation rate in period 2 if the government does not take action c. The government wants to keep real GDP at its potential level in period 2. Describe (fiscal) actions they can take and explain why. d. Will the inflation rate in period 2 be higher or lower if the government uses fiscal policy to keep real GDP at its potential level?QUESTION 2: Consider the table below which presents the potential and real GDP in period 1 and forecasts the potential and real GDP in period 2 if the Fed does not use monetary policy. [Note: we are currently in period 1 and period 2 has not occurred yet]. Year Potential Real GDP Real GDP Price Level $10.2 trillion $10.2 trillion 100 2 10.8 trillion 10.6 trillion 103 a. Suppose the government wants to keep real GDP at is potential level in period 2, should they use an expansionary or contractionary policy? Explain why and describe actions they can take (i.e. increase or decrease government purchases and taxes). b. Suppose the government's fiscal policy is able to keep real GDP at its potential level in period 2. How would the following compare to if the government had not engaged in fiscal policy: . Real GDP . Potential GDP . The inflation rate . The unemployment rate7. Freiland is a closed economy, which is characterized by the following equations: C = 100 + 0.5Ya. 1= 60 - 5r. G=T= 80, MJ = 400 + Y - 10i, M.=500 where r is the real interest rate and i is the nominal interest rate, both in percent. Prices do not change in this economy. Therefore, inflation is zero (i.e., i=r). a) Assume that the Central Bank of Freiland sets the nominal interest rate at 3% and keeps it at that level. Find consumption, investment and output in equilibrium. b) Derive the IS and LM curves algebraically (functions). c) Combining these two, find the equilibrium level of (i, Y). Explain verbally how would you draw IS-LM curves? (Hint; Thinking on characteristics of IS and LM curves and the equilibrium) d) Assume government expenditure increases to 200. without a change in taxes or the money supply. Derive the new IS and LM curves algebraically and write the difference compared to (c) and explaining verbally how the IS-LM curves change on the graph
